India being a developing country has put forth various targets that are needed to be achieved in order to become a Competitive Superpower in 2020.(VISION 2020). At present ,Installed capacity of India stands at around 185MU.Targets have been revised time and again by the Indian Government to meet with growing demand.There was a target of adding 78700 MW in last fiscal year,but that target has been revised again to 52000MW.So,Targets are set and then revised time and again to furnish the Political scenario leaving everything regarding power sector in a limbo.There have been many challenges to the capacity addition to the Indian Power Sector.These can be grouped as under:
1) Fuel Concerns
2)Social and Regulatory Concerns
4) Delay in Financial Closure
The issues can be taken one by one as:-
1) FUEL SUPPLY GAP:
a) Domestic Supply Demand Gap is widening the Fuel shortage in various industries.Nodoubt,The Installed capacity is increasing BUT,there is a big question mark on the Demand Supply Gap.Until Unless this thing is solved,India will not be able to become a Power Honcho.
b)Stringent Environment and forest norms:
Another problem faced by the Indian Power Sector is the Stringent Environment and Forest reforms.In the past year,There have been cases in which Power Plant projects were either cancelled/halted due to non compliance with the environment norms.GO as NO-GO Areas have also come into picture in lieu of environmental norms and regulations.Although to tackle these issues,Special purpose Vehicle(SPV) has come in to picture in case of UMPPs.
c) Land Acquisition Issues:
Land Acquiring has become a major roadblock in the path of setting of Power plants.Although Private Producers are coming with major projects but the main thing that stands as a hurdle is the Land.Generation companies are not getting enough land to set up their power plants.
d) Long term Fuel
Although India is the 3rd largest produces of Coal in the world,still it is in dire straits as far as the Supply of coal is concerned.Last year,Targeted Coal Production was 550Million Tonnes,But it was achieved 533 Million Tonnes and that is only 2 MT Increase as compared to previous year.Moreover,Various regulations have been imposed on the Coal Mining Companies too,Import of Coal has also got a shock as Indonesia,Australia are looking for imposing stricter norms on their Coal Export making the condition more worse for Indian Power Sector.
2) SOCIAL AND REGULATORY CONCERNS:
a) Land Acquisition problems:
Acquiring Land has become as major bottleneck in setting of Power plants.Although,Private as well as PSUs have bigger plans to make India’s installed capacity grow leaps and bounds,But the “Foundation Stone” of Land Acquisition is coming on way due to socioeconomic cause.
b) Water Scarcity for Thermal Projects:
Water being a prime necessity in Domestic as well as industrial use esp. in Thermal power plants has also emerged as a road block to the new Power projects.Water can be termed as “Blood” for Thermal Power Plant.Various Power plants are facing problems due to uneven rainfall conditions and due to social conditions of using river water for power plants.As per analysis,for 1320MW Power plants,it requires around 43 million cubic meters of water per year.
c) Strict Environmental and Forest Clearances:
Getting Forest and environmental has also posed a detrimental effect on the capacity addition of Indian power sector.Number of projects have been brought to a halt due to environmental issues.Already India is ranked high on the pollution erupting countries in the world,therefore deforestation is not allowed.One always like”YOU CAN ELIMINATE THE THINGS FOR SHORT TERM ADVANTAGES/GOALS”.Forests are already on a depleting scale,so Environment ministry is quite dubious of allotting that land for power plants.
a) Hindrance in obtaining Transmission access:
Having a healthy transmission system has also become a prime necessity in order to commission a power plant.Most of the Land issues come as a road block in the way of Transmission system.Moreover,There is also need to change the archaic Telegraph Act that does not talk about the compensation.Land acquisition is governed by Telegraph Act 1885 which provides for payment of only damages caused due to erection of towers.According to CEA Data,around 120 Power transmission projects have been either delayed or grounded due to various reasons as stated above.
b)Lack of Coal Handling Units:
No Doubt ,the installed capacity is increasing on positive scale,but the Upstream products has got numerous problems.one of which is Coal handling Units.Indian power sector is not sufficient enough to handle coal and thereby fulfilling the demand of the growing India’s power capacity.Lack of efficient systems of Coal handling units are posing a major problems,some of the solutions can be opting for Dust busters to optimize coal usage.
c) Lack of Ash Disposal Facility:
Disposing Ash is also seen as an albatross around government’s neck because,Producers dont have the sole purpose of generating power.Environmental conditions should also be taken into consideration.At present Indian power plants are lacking in this regard to leading to lower capacity addition.
4)DELAYS IN FINANCIAL CLOSURE:
a) Poor Financial Health of SEBs
SEBs(State Electricity Boards) have been bad for past so many years.Some of the problems that are being faced by SEBs is Lower collecting efficient,Power theft etc.According to recent Power Line report,TNEB is having the highest AT & C Losses and quite low collecting efficiency too.There are very few SEBs,which are doing well,still the revenue has become “stagnant” for the past so many years.So untill unless this is revamped in a better way,one cant think of adding more capacity addition to the Indian power sector.
b)Contractual Agreemnet violations including PPAs:
Most prominent case in the hindering of capacity addition is the violation of PPA.There have been a number of projects in which PPA that has been signed between the two parties is not taken as benchmark report to go about it.Companies keep on forcing to revise the PPA.Actually there are two sides of the coin,Input material is getting costly day by day,so it becomes a need for the compny to opt for revised PPA in order to get adequate ROR.
c) Lack of availability of equity and funds:
Banks are not willing to give adequate funds to new players in the market and they are looking for some “guarantee” from their side which banks can take as a base while giving loans.Moreover, Micro finance institutions can’t help bigger power companies which are looking to set large capacity power plants.
Thus,we see there are various bottlenecks that are still coming in the road of capacity addition ,thereby making India devoid of adequate power!!!!!